Agenda Item: 12(c)
Prepared By: Guillermo A. Polanco, CPA
Business: Bond Refinancing
Department: Finance
Subject:
Title
A Resolution to Issue the 2016 Series Bonds to Refund the 2010A Series Bonds and Legally Defease the 2010B Bonds
Body
BACKGROUND:
On September 6, 2016 staff advised City Council of the cost saving opportunity associated with refunding the 2010A Series Bonds and 2010B Series Bonds. City Council is requested to approve a resolution refinancing the Series 2010A and paying off 2010B Utility System Revenue Bonds due to current favorable market conditions. The offering of the bonds will be carried out through a negotiated sale, consistent with how the City has sold most bonds in the past. A negotiated sale requires that an underwriter be hired so that the firm can pre-market the bonds before the City enters the market.
Notwithstanding market conditions, it is expected that the Preliminary Official Statement will be posted and printed by October 26th and the Bonds priced during the week of October 31st. Tentatively the closing of the bond deal will be carried out during the week of November 21st.
The 2016 Series will be issued on parity with the City's Utility System Revenue Bonds, Series 2010A, originally issued in the aggregate principal amount of $50,475,000 and currently outstanding in the aggregate amount of $44,270,000 and Series 2010B, originally issued in the aggregate principal amount of $7,365,000 and currently outstanding in the aggregate amount of $6,225,000.
FUNDING SOURCE / FISCAL IMPACT: Water and Sewer operating revenue derived from rates are pledged as debt service payments of principal and interest for 2010A and 2010B Series. The estimated savings in debt service will have a positive effect on future Utility budgets by reducing the annual amount of principal and interest by an annual average of $228,685 net of fees over 24 years for the 2010A Bonds and $664,413 net of fees over the remaining 17 years for the ...
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